An Analysis of Oil & Gas Company Disclosures from the Perspective of the TCFD

We conducted a type of “field experiment” to evaluate how difficult it will be for companies to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) published in June of 2017.

These recommendations are based on the four categories of governance, strategy, risk management, and targets and metrics. Beneath these are 11 more detailed recommendations. We selected an industry that will be especially challenged by these recommendations — oil & gas. We examined the disclosures of 15 of the largest oil & gas companies by market cap that had filed a 10-K or 20-F in 2016, so before the TCFD’s recommendations were published. We also examined their sustainability reports. Our reasoning was that if companies were already doing a reasonable amount of disclosure before these recommendations were published, then it would be more feasible to implement the TCFD’s recommendations than if virtually no related disclosures were being made.

In general, we found reporting for that year uneven, with some TCFD categories fairly well covered and others not. We also found variation across companies, with most making fairly modest disclosures but some being fairly progressive in this regard. Significantly, we also found that most of the disclosures were in voluntary sustainability reports, not the financial filings required by statute and as recommended by the TCFD. Taken in the aggregate, at least one company was reporting on each of the 11 recommendations with one exception. This suggests that it is feasible for companies in this sector to follow the TCFD’s recommendations if they are interested in doing so.

By: Robert G. Eccles, University of Oxford – Said Business School and Michael P. Krzus, Independent